Archive for August, 2009

Affordable Ways To Learn!

Aug 30

Posted by Day Trading editor in learn day trading | 5 Comments

I have experienced that in order to make money, I need to have to proper knowledge for it. It is very important to consider that making money is not that simple at all. This is because I have to know how to weigh the risks of investments, as there is no assurance that I will get my investment back.

After reading a number of books and attending a few seminars on wealth creation, I realized that it is important that I should be educated first about money in order to lessen the risks of losing my money and increase the chance of earning more money and retaining it. I have to consider that it is not just all about how I make money, but it is also about how to properly manage my money and my investment.

So what are the affordable ways to learn?

Firstly, there are free preview seminars that are readily available. The free preview seminars usually are meant to sell workshops that last a few days. By attending these free preview seminars, I can still learn something about investment and money management.

For example, there is a free preview on option trading. The free preview is mostly likely trying to sell me certain option trading course or workshop. But I will be able to learn something about option trading in the free preview seminar.

Secondly, I can consider getting financial books or magazines from the library. It is free and I can learn about accounting and finance and ways to effectively handle my money. Also, I am able to listen to audio books on investment and money management in the library. In addition, I can watch educational seminars on videotape or VCD in the library.

Thirdly, I can play board games such as Cashflow 101 that teaches financial knowledge. I can go to cafe that offers board games for playing to play the game with my friends. Alternatively, I can search and join any interest groups that play such board games regularly in my neighborhood.

Next, getting financially educated on the web is also an affordable way to be financially literate. There is always information on personal finance and investment. They are available especially in personal blogs as free information.

In fact, webducation is going to be the next big wave and it is threatening to shut down traditional schools. We are lucky in the sense that Internet technology is matured enough to support streaming videos. Internet technology has caused a lot of things to be available at affordable price because they remove the physical boundaries and the cost of delivery.

What this mean to me is that I am no longer restricted by distance to attend seminars. Even if a financial guru is oversea, I can still learn from him via recorded video seminars that is accessible online. Also, if I have broadband at home, I can learn at the convenience of my home 24 hours a day, 7 days a week. The live seminars are recorded and put online for free access or paid subscription. These online video seminars are usually very much cheaper than live seminars as there is no reproduction cost. By comparing against recorded seminars in DVDs, online video seminars are still much cheaper because there is little or no cost involved in reproduction and delivery.

Lastly, I can search and join interest groups that focus on investments or personal finance in my neighborhood. These interest groups usually have regularly meeting to share information about investments or personal finance.

No matter how much I have learned theoretically, my knowledge will be useless if I do not put it into practice. By taking actions to practice, I will have a deeper understanding on the subject.

For example, I have started to invest in stock after learning all about stock investment such as risk management, money management and so on. By trading using real money, I will have a real taste of fear and greed coming into play to affect my investment decision. These are things that I cannot learn by reading books, listening to audio clips and watching video seminars. It is through real experience that I will gain more from my theoretical knowledge.

One thing to note is that if I am practicing what I have just learned, I will not be risking too much money. This is because I know that I will be making mistakes in my investment and personal finance as a beginner. Though learning from mistakes is a quick way to achieve financial success based, I may not be able to recover from a single mistake if I have lose a lot of money in that mistake. Thus, it is important to be patience in my practice by risking as little money as possible.

* DISCLAIMER *
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.

Max Ng
http://www.articlesbase.com/finance-articles/affordable-ways-to-learn-114674.html

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Persistence Pays Off for Joe Stowell

Aug 30

Posted by Day Trading editor in day trading techniques | 1 Comment

According to independent trader Joe Stowell, persistence and courage are two key characteristics necessary for success in trading. Persistence certainly has paid off for Stowell, who traded part time off and on for 20 years, before leaving his job as a school teacher to trade full time.

Stowell first became intrigued with the futures market when, as a young man, he worked in a potato packing shed. The farmers around him were trading the Maine potato futures contract, either hedging or speculating. “I started to follow the price quotations in the newspaper,” he said.

In college, Stowell attempted to learn more about the futures markets, but in the early 1960s there were few books available on the subject. He was able to locate a book in the library called Commodity Speculation- With Profits In Mind by L. Dee Belveal. At the time, Stowell had opened a trading account with a broker in Rochester, New York, where has was in graduate school, and “they would send me these reports on technical and fundamental factors and I had no idea what they were talking about,” Stowell said.

But then, Belveal wrote a second book entitled “Charting Commodity Price Behavior” and Stowell bought it. “I soon started hand charting. I attempted to trade off and on for a 20-year period, whenever I would accumulate enough money to trade,” he said.

But it wasn’t until 1984 that Stowell devised his “cups and caps” pattems-a three-bar technical chart formation that signals short-term trades. “I thought I had finally found something that I could trade the market and be profitable with,” Stowell said.

Stowell began trading his cups and caps technique, which is a purely technical approach, with a $5,000 account in 1985. “Just a little over two years later I had $100,000. All I ever did was take money out of the account, I never put money in,” he said.

“In 1987 after making $100,000 1 finally thought I could do this, and that’s when I decided to try it full time,” Stowell said. He took a two-year leave of absence from his teaching position to trade. “When it came time to go back, my heart and soul was in trading and the markets … so I resigned my position,” Stowell said. Since then, his trading and investing has expanded to include individual stocks and gold mutual funds, but Stowell calls the cups and caps pattern his “bread and butter.”

Stowell limits his futures involvement to the Treasury bond market. He likes the bond market, and they fit his short-term trading technique because they have “good volatility, and it doesn’t take a big move to make a nice return on a two- to three-day basis,” Stowell said.

Stowell shys away from the S&P 500 contract because “you are getting into large margin requirements, and you are at the mercy of the trading programs. The overnight session in the bonds doesn’t really pose any problems, but that’s not really so in the currencies,” Stowell added. The often large moves in currency prices overnight don’t make these futures a suitable match for Stowell’s trading style.

“I’ve learned that if I stick with the one (futures) market and apply my energies and talents that I do much better. I’ve broadened out my trading and investing life by going out into stocks and gold mutual funds,” Stowell said.

The basics of his cups and caps pattern “follows the concept that markets go up and markets go down,” Stowell explained. “Once the market has gone up, I look for a cup pattern, made up of at least three bars. I look at the three closing prices, or the lows. In a cup, the first bar would have a higher close (or low), the middle bar has a lower close (or low) and the third bar has a higher close (or low),” Stowell added.

“It is a reversal formation. Once the market has rallied and has stalled, if you get a daily close below all three lows of the cup formation, it will trigger a selling point,” he said. The cap formation is essentially the opposite of this. “The market has got to sell off first and then the next move in the market will be up,” Stowell explained.

On taking profits, Stowell generally looks for “two profitable doses … and stops are set to the extreme of the formation.” He doesn’t leave his stop-loss orders in place during economic reports, though, as that is “inviting the market to pick your stop off and you get huge slippage,” Stowell said.

Overall, “when I start a trade, I know the risk I’m taking, but the reward is open ended,” he added. “I just look to take a chunk out of the middle (of a move). I don’t try to pick a top or a bottom,” he said.

While Stowell developed this and other technical chart pattern trading techniques after studying his hand charts for over 20 years, he says that success in trading also comes down to ‘a lot of discipline, courage and persistence.’ “If a person has persistence—that’s very, very important and you have to have courage. You’ve got to be willing to step up when its time to pull the trigger when your signals are there,” he said.

He cautions that traders “need to find their own comfort level. If you have too much exposure to the market, then you get away from things you want to do, and then the market forces you to pull out,” Stowell said. However, all beginning traders will “have to pay their dues,” Stowell believes. “They have to learn about the excitement of trading and the fear, and you have to make mistakes. They have to go through a learning process,” Stowell said.

“Every day is a new day. It’s always new. You have to continually work at your skills. You keep having to apply yourself,” Stowell ended.

Martin Chandra
http://www.articlesbase.com/finance-articles/persistence-pays-off-for-joe-stowell-90008.html



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Forex Day Trading – a Great Way to Wipe Out your Equity Quickly

Aug 30

Posted by Day Trading editor in day trading systems | No Comments

There is no better way to wipe out your equity quickly than FOREX day trading.

I read all the time about how great FOREX day trading is, but never seen anyone able to give me a real time long term track record.

The reason of course is:

FOREX day trading is based upon logic that is simply ridiculous and dooms it to failure.

So why do day traders lose?

Consider this:

Day traders think they can predict movements in short time frames, but all short term moves are random and volatility can (and does) take prices anywhere.

If all the moves in a day are random you have no chance of making money as support and resistance points are meaningless.

Trillions of dollars are traded daily by millions of participants and to try and predict where prices will go in short time frames is laughable.

Support and resistance levels are NOT valid

Day traders try and work off support and resistance levels and continually get stopped out as volatility can and does take prices anywhere.

So you have a high probability of being stopped out and day traderâ??s pile up a huge number of small losses.

Occasionally they get a winning trade (more by luck than judgement) but of course they snatch any profit they can get as running profits is totally alien to day traders.

The result is a wipe out of equity and it normally happens quickly.

What about all the day trading systems promising gains?

Most of these are sold by people who have never traded and rely on enticing copy to sell their systems, or failed brokers looking to appeal to the greed and ignorance of buyers.

These day trading systems NEVER come with real time track records they come with hypothetical track records.

If you donâ??t know a hypothetical track record is one those us done in hindsight knowing the closing prices!

Well thatâ??s hard; my seven year old daughter could do that.

The fact is day trading is simply a great way to lose money quickly and it is surprising how many traders fall into the trap of trying to win at it

Donâ??t make the same mistake, unless you want to lose your account equity quickly.

Sacha Tarkovsky
http://www.articlesbase.com/currency-trading-articles/forex-day-trading-a-great-way-to-wipe-out-your-equity-quickly-134529.html

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Day Traders Afraid of Pulling the Trigger?

Aug 30

Posted by Day Trading editor in day trading strategies | No Comments

Afraid of Pulling the Day Trading Trigger?

Fear…implies anxiety and usually the loss of courage. This definition of fear is useful in helping define the issues that traders face when coping with fear.

All traders have fear, but winning traders manage their fear while losers are controlled by it.

Winners take positive action in spite of their fears.

Fear of loss tends to make a trader hesitant to execute his trading plan. This can often lead to an inability to pull the trigger on new entries.

When fear of loss holds you back from taking action, you also lose confidence in your ability to execute your trading plan. This causes a lack of trust in your method as well as in your own ability to execute future trades.

You can see how fear can set in place a vicious cycle of recurring doubt and, in turn, reinforce a traders’ lack of confidence in executing new positions.

Thus begins the analysis paralysis, where you are merely looking at new trades but not getting the proper reinforcement to pull the trigger. In fact, the reinforcement is negative and actually pulls you away from making a move.

In poker lingual…. you can’t win what you don’t put in the pot. You can be the tightest player in the world. You won’t lose any money. But you definitely won’t make any money.

Our minds automatically avoid pain for pleasure. This is how our brain is programmed. New traders who have the trouble of pulling the trigger associate a trade with a potential loss that can cause financial or emotional pain.

Do you imagine taking the trade and never pulling the trigger? Are you right on your analysis but are unable to execute just to watch the markets runaway from you? The biggest conflict that is causing this is your belief in pain.

This may be caused by your pain for loss or your need to be right. The need to be right is associated with the need to be perfect every time. If you are a perfectionist there is a conflicting belief that you must eliminate to trade successfully. Perfectionists believe that there is a “correct way” and a “wrong way”. Taking a loss is considered the wrong way to them. Trading is a game of probability. And it is not about being wrong or right. It is about making money.

You must get used to dealing with uncertainty. There is no exact science in trading and nothing can be predicted in advance. However, with enough experience in the markets you will be able to smell market weakness from market strength.

For those who are having trouble taking losses, you are overweighing the loss. If you know your risk parameters there should be no problem taking a trade. Perhaps you are not confident in your own trading methodologies. Have you tested your setups? If you have a strategy that is 70% profitable, take the trade. Once again trading is a game of probabilities. If you have a proven setup with strict money management, you will be profitable. Have faith in your methods.

When you’re having trouble pulling the trigger, realize that you are worrying too much about results and are not focused on your execution process.

For some people they are unaware that the markets they are trading does not fit their personality. If you like a slow market you should stay away from the S&P. Trade corn instead. Know your personality and find the market that suits you. This is one mistake a lot of traders make. Thus, trading is not only about understanding the markets. It requires self-understanding as well.

If you have a perfectionist mentality when trading, you are really setting yourself up for failure, because it is a given that you will experience losses along the way in trading. Again, you have to think of trading as a probability game. You can’t be a perfectionist and expect to be a great trader. The objective should be excellence in trading, not perfection.
You will be better off seeing trading as a series of opportunities. and your task is to create a plan that finds opportunities with potential rewards that are several times greater than the risks you incur.

Setups will never be perfect, and that’s okay, as long as you exit trades when things don’t go your way.

Use a clearly-defined set of entries and trade them exclusively. A lack of disciplined entries brings fear. Have confidence in your entries and trade them exclusively and give them time to earn your confidence.

Remember this, it’s better to trade a set of mediocre entries with discipline and great exits than to trade excellent entries without discipline and first-rate exits. Changing your entries continually, tinkering with them, wasting time and money hunting perfect entries, will never give you confidence.
There are no perfect entry strategies

Consider trading smaller positions to get the fear of losing out of your system and get yourself focused on execution.

And to conclude:
Practice does not make perfect. Only perfect practice makes perfect.

———————————————————————–

Linda Wainman
http://www.articlesbase.com/finance-articles/day-traders-afraid-of-pulling-the-trigger-64550.html

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Who Trades The Markets

Aug 30

Posted by Day Trading editor in day trading courses | 2 Comments

Let’s just clarify what is meant by the term trader, sometimes called retail trader or day trader.

This is an individual who trades the financial market whatever they may be using their own money. They may or may not be dependent on the results of their trading for their income. This does not include professionals who work for institutions or who manage other people’s money. It does not include anyone who gives advice that is charged for.

One of the reasons that I want to make this point clear is that many new traders that I have met fall into the trap of listening to too many people who have never traded their own money.

Many institutions have what they term trader’s working for them. The reality is that these people are often no more than someone executing an instruction given to them by the client.

They don’t have any analytical capabilities other than what is provided to them by their employer.

Unless you have experienced winning and losing your own money based on your own decisions you will never fully appreciate what the retail trader is going through.

It’s sort of the difference between being the manager of a company and being the owner of a company. For those of you have experienced the difference you will know exactly what I am talking about.

I don’t mean to take away anything from the many professionals out there who offer excellent services and have long and distinguished careers in the industry. I only wish to point out that there is a great difference between the mindset of the two groups.

Someone working for a large institution who is called a trader is very far removed form the guy sitting at his computer all day making decisions that effect his bank account.

You will only ever be successful as a trader if you rely on your own judgment to trade. At the end of the day it’s your money. I would go one step farther and divide day traders into three groups:

1. Individuals who have a small amount of money and have read or listened to someone who has told them that there is lots of money to be made trading.

2. Individuals who have a fair amount of money and want to try something new. They may look at trading as another business venture and expect to have to invest for a return on their money

3. Wealthy individuals who are looking for ways of increasing or diversifying their portfolio. They may be looking at ways of earning more money from their money with less investment e.g. leverage.

Traders come from all walks of life, everything from company directors to bricklayers. Some trade full time and others trade part time whilst holding down full time jobs.

Generally they would have taken some courses on technical analysis or some technique that someone was selling and founded their decision making process on that.

They would then allocate a part of their house or office for this purpose, set up a computer and away they go.

Many, as I did, paid thousand of dollars for courses only to find out that the method they paid for didn’t work.

The problem is when you start trading: you don’t know any better and will usually pay for the course with the best marketing not the best content.

Martin Chandra
http://www.articlesbase.com/finance-articles/who-trades-the-markets-88042.html



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Exploring Forex Trading Online

Aug 28

Posted by Day Trading editor in learn day trading | No Comments

As with many other genres of investing, the ability to trade online has revolutionized foreign exchange trading. Forex trading online has not only opened the door to more information, but it has increased the speed with which a forex trader can access the information. In addition, the practice of day trading forex has also become very popular. Without the ability to trade online with up to the minute trading quotes, day trading would not be possible.

Forex trading online is possible because traders have access to more information about currencies than they have ever had. With just a few clicks of the mouse, a forex trader not only has access to current prices, but full histories, trends, and expert commentary on how the market is behaving. Learning to compile and use all of this information makes it much easier to develop a sound forex trading strategy.

Forex trading online has made day trading forex possible because current information is right at the day trader’s fingertips. Current information is a powerful tool to have in your toolbox when you are trading forex. It is vital that that you be able to have the latest updates when you are planning trades. Slight shifts in the market or in the economies of countries whose currencies you are interested in acquiring are important pieces of news as you seek to build a powerful foreign exchange trading portfolio.

Forex trading online gives the trader the ability to tabulate accurately their balances at the end of each day. In fact, their account balances are always current up to the minute online. This is very important for those who are active in day trading forex. Long-term investors are more concerned with the long-term performance of a currency. Day traders though, work the slight shifts and nuances of a currency’s price throughout the business day. Being able to accurately and quickly check the value of your portfolio is a vital part of a day trader’s routine.

As the tools on the internet become more powerful and user friendly, the practice of forex trading online will become increasingly popular. The availability of simulators, which allow prospective traders to work with play money while they get the hang of it, is equipping a growing number of people to confidently and effectively trade forex. The next generation of investors will not know what life is like without the internet.

While many folks who actively trade today have had to learn to use the tools available on the internet in the midst of doing business, these tools will be second nature to those who will come behind them. Future generations of forex traders will know how to utilize the full scope of forex trading online tools that are available to them and they will be the most powerful group of investors that any economy in any market has ever seen.

Lorna Goldsborough
http://www.articlesbase.com/finance-articles/exploring-forex-trading-online-131523.html

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Massages: Improve The Quality Of The Massage You Give

Aug 28

Posted by Day Trading editor in day trading techniques | No Comments

There are many ways to give massages. You could go in to see a professional, but chances are good that you will find yourself facing some pretty high costs. You could ask your loved one to help you, but before you do this, you’ll want to give them some training. There’s no need to enroll in any type of school just yet, though. You can get much of the skill training and improvement training in massage giving right on the web. This will help you to improve the overall quality of a massage that you give.

The first thing that you need to do is to learn a few techniques to giving massages. There are many of these offered right online, in fact. You’ll want to learn how to do several so that you can have a few examples to try out to determine which the one that you enjoy the most is. If you like a really good massage and can handle a bit of pain to get it then try a deep tissue massage. If that’s a bit more than you care for, you’ll want to look for one that doesn’t use such intense pressure.

The good thing is that most of this can be learned right online. You can learn a number of different techniques and even improve the quality of your massage giving by simply learning a few tips and tricks that others, even professionals use.

You can definitely get a great massage from a professional. But, in between those massages, why not make sure that you can enjoy a few massages on your own? In fact, if you and your partner both learn how to do them, you may find trading off to be a great way to end your day. Massages of all types should be considered. You’ll love them all.

Jenny Ambrose
http://www.articlesbase.com/health-articles/massages-improve-the-quality-of-the-massage-you-give-94598.html

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Online Forex Trading and Day Trading

Aug 28

Posted by Day Trading editor in day trading systems | 4 Comments

Online Forex trading is a very hot trend these days, but you need to know one thing. Day trading is a very good way to lose money. Why? There are many risks involve with Forex day trading and with currency exchange as a whole. The volatility of the currency trading market is very high. This is one of the most important aspects of the Fx trading world. Trillions of dollars exchange hands each day and the market goes up and down.

Are you considering day trading? This is one of the best ways to lose money as we said above. Forex day trading does not work because the data is not reliable. Also volatility is random in the online Forex trading world. Traders trade hundreds of millions of dollars each day and if you try and predict what all these people will do in this short time span you are going to have a bad time. Also your investment is not going to be good. Many of you could have seen many Forex trading systems with excellent records of gains. Of course you have seen them, but they are not telling you the truth, as we are going to explain later on.

Many people might say they have seen online Forex trading systems with great tracks records of profits. But let us tell you something. They know the closing price. The Forex broker that is telling you this does not trade with real dollars. Many times what you get is one of these things: CFTC Rule 5.61.. Simulated or hypothetical results have limitations. These results do not represent actual trading. These are not like actual performance records. Many times the results are over compensated for the impacts of the market, for example, lack of liquidity. These trading programs are designed with the benefit of hindsight. There is no guarantee that any account will achieve the losses or the profits of any of these simulated accounts.

Online Forex trading systems that make huge claims will never end up succeeding in the real trading world. Do you want to lose your money? Just join these Forex brokers. You need to trade the odds over a longer term if you want to make money here. Currency trading is a tough game even if you have reliable data. You need to know a lot about the Forex world if you want to make money here.

Omar Guaba
http://www.articlesbase.com/online-business-articles/online-forex-trading-and-day-trading-352689.html

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Learning Some Important Tips For Forex Trading

Aug 28

Posted by Day Trading editor in day trading strategies | No Comments

For you to become a successful forex trader you need to know what forex trading is and how to successfully trade foreign-exchange. Sufficient knowledge is essential to foreign exchange trading. You can learn some strategies through on-line foreign exchange tutorials.

An on-line foreign exchange tutorial will explain how the foreign exchange market flows and will also explain the types of foreign-exchange orders that are available to you as a foreign exchange trader. It will also let you know about technical indicators and what they mean, the economic indicators you will need to be aware of and the various options and strategies that are available to you as a forex trader.

Joining the forex trading bandwagon with both feet? Here are some must-know tips on foreign exchange trading and mini-forex to help you stay afloat in the Foreign Exchange currency market.

1.Know your foreign-exchange trading market- educate yourself about the currencies that you trade. The more you understand about the country whose currency you are trading in the forex market, the more precisely you will be able to predict which way the money will move.

2.Practice makes perfect-but it’s not the real world- practice forex trading accounts are ideal for learning how a particular trading account works but they are not the real world. Many experienced traders recommend starting off with a mini foreign exchange account to minimize your losses while you get acclimated.

3.Pick a forex trading system and stick with it- savvy forex traders will tell you that system is everything. It by system lets you automate your trades based on history, following the traditional peaks and valleys. Set up a system and live with it to make the most of your forex trading.

4.Keep your eye on the margin- margin trading is a great way to lose a lot of money quickly. Stay away from forex margin trading until you are sure you know what you are doing.

5.The only win that counts in foreign-exchange trading is the bottom line- in foreign exchange trading, the bottom line is how much money you made at the end of the day. Don’t count won or lost trades only dollars and cents.

The most essential aspect when it comes to forex trading is to educate yourself about it so that you understand how to trade and how to trade efficiently, successfully. The more you educate yourself with foreign exchange trading the more understanding you will have and the more success.

Stephen Campbell
http://www.articlesbase.com/currency-trading-articles/learning-some-important-tips-for-forex-trading-352000.html

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Do Not Rush Into Investment!

Aug 28

Posted by Day Trading editor in day trading courses | 6 Comments

After graduation and working for a few years, I have learned that working for money is very tough. From what I have concluded from Rich Dad series, I know that I must make money work harder by investment. So when I heard that I could make money easily by investing in shares, I quickly rushed into it. I did not come from a strong financial background like accounting. Neither did I attend any share investment courses before I have started my investment in shares. With a little savings, I simply jumped into it.

Maybe I had what you called beginner’s luck. I managed to make a bit of money from my first few trades. Then my ego became inflated. I thought that I was rather good at trading shares. Also, my greed came into the way too.

I figured out that if I could make $100 from a single trade, then if my invested capital were to increase to 10 times the original capital amount, then I would have made $1000 easily. If I could make $1000 per trade then basically, I could achieve financial freedom in a very short time. That idea really got me very excited. But the only issue was that I did not have such a large amount of capital.

Here is the bad news! I found a way to get around the issue of not enough capital. There is this thing known as contra trading which solves my issue. The rules for contra trading vary from country to country.

The basic idea of contra trading is that I am able to earn money without any capital. If I buy shares of a company today on the stock exchange, I only need pay up the purchase amount within the next 3 days. If I happen to sell all the shares within the next 3 days period, then I do not need to fork out any money at all. The sale amount will be able to cover the purchase amount.

For example, if I were to buy 10,000 shares at $1 today from the stock exchange, then I would need to pay up $10,000 plus the transaction fee within the next 3 days. Let say the price of the shares increases to $1.20 on the next day. And I sell all the 10,000 shares at that day. Then the sale amount will be $12,000 minus the transaction fee. This sale amount is definitely greater than the purchase amount. So my profit will be the sales amount minus the purchase amount without the need to fork out any initial capital.

You must be wondering why I mentioned that it is a bad news when I found out about contra trading. Well, let look at the above example again.

if I were to buy 10,000 shares at $1 today from the stock exchange, then I would need to pay up $10,000 plus the transaction fee within the next 3 days. Let say the price of the shares drops to $0.80 on the next day. Since the price has dropped, I will not want to sell and make a lost. But let say on the last day, the price of the shares still do not recover. If I want to hold on the shares, I will need to pay the purchase amount. Since I do not have the money, I will need to sell at shares at a lost. If I do not sell my shares and do not pay up the purchase amount, the stock exchange will do a forced sell on my behalf at an even lower price. No matter what, I will still end up with a lost.

Well, that is exactly what had happened. That is the reason that I told you it is bad news for me to find out about contra trading at such an early stage. Instead of making money, I ended up losing money. The amount that I had lost almost wiped out whatever little savings that I had. And I woke up from my dream that I was a good trader. Because of this painful lesson, I learned that it does not pay to rush into investment without knowing what I was doing. And I decided that I want to learn more so that I may recover my loss.

After study and learning more about shares investment, I have learned that a few general guidelines can be applied to any kind of investments.

Firstly, I must get educated in the type of investment that I am investing. With this knowledge, I will be able to identify the risks involved in that type of investment.

Secondly, I must find out if there is an existing system to manage the risks involved so that the investment becomes more viable. I will avoid inventing the system because it will cost too much money and effort due to mistakes.

Thirdly, I will always start with a small amount when investing in any new type of investment. This is so that I may gain experience and learn more about the practical side of the investment. Since I only risking a small amount, my loss will be capped if I make any mistake.

Next, I will only invest after I have set aside my emergency funds and taken care of my insurance needs.

Lastly, I will only invest the amount of money that I can afford to lose. This investment amount should be a separate amount from my emergency funds.

* DISCLAIMER *
The author only provides the material and information as a layperson’s views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.

All the materials, information and procedure in this book are only the author’s personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.

The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.

The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.

Max Ng
http://www.articlesbase.com/investing-articles/do-not-rush-into-investment-93788.html

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